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Extension: Building a budget for household appliance replacements
Appliances
- Point3d Commercial Imaging, Unsplash

In my home, we’re looking at replacing our clothes dryer. I don’t remember how many years we’ve had this one, but I do remember that it cost about one-third the price of dryers I just looked at in the store.

Appliances don’t last forever

Major household appliances have a useful life between 10 and 15 years. Since most homes have at least nine major appliances, we might expect to replace one appliance every year. 

In addition to the purchase cost, appliances may require additional costs for delivery, installation, and removal of the old appliance. 

While replacing an electric dryer can be do-it-yourself easy, professional installation of a water heater can cost as much as or more than the price of the appliance. 

On top of that, purchasing with credit will add monthly finance charges — unless you’re prepared to pay off the balance immediately.


Saving over time beats paying over time

While savings accounts aren’t paying much in interest these days, earning a small percentage on your money is a net gain. 

Paying 15-20 percent on a credit card balance, however, is a significant net loss. 

For example, if you charge $1,000 to a credit card with a 15 percent interest rate and pay $100 per month, it will take 11 months to pay off the debt and cost over $75 in finance charges. 

To prepare for inevitable costs of replacing household appliances, set aside $20 to $50 each month in a dedicated savings account. At the low rate, this personal escrow account will grow enough to replace an electric dryer in about three years. 

At the higher savings rate, in three years you’ll have enough saved to replace 2-3 appliances. 



Chart
- Forsyth County Extension


Finding extra money: Budgeting tips and tools

A budget is an annual planning tool to help manage income and expenses, ideally so that expenses are less than income. 

Developing a budget is a matter of pulling together all sources of monthly income and all recurring monthly expenses. Some expenses are fixed, like phone bills, mortgage, and car payments. 

Others, like electricity, food, and gasoline vary from month to month, but tracking actual costs over time helps in figuring an average and in knowing when to expect higher bills. 

For example, water and electricity bills typically spike in the summer, when we’re watering lawns outside and running air conditioning indoors. 

Around holidays, grocery expenses may increase if we’re hosting; gasoline costs may increase if we’re traveling.

Once you’ve got a budget spreadsheet detailing monthly income and recurring monthly expense categories, it’s time to track those “other” categories that gobble up money. 

My approach to this task is to ask for receipts for every purchase and enter the amount into a Monthly Expense Tracking spreadsheet each week when I pay bills. 

As well as recurring bills, this spreadsheet includes columns that emerged after several months of tracking “other” expenses: clothing, entertainment, home and yard, gifts and charity, and medical expenses. 

Seeing the actual numbers can be shocking, but it can also identify areas where we can cut back enough to “find” extra money to fund future appliance purchases. 

Target one or two categories with a specific goal and engage the family in discussions about it. Reducing expenses is like any other change: Starting small and with family support increases success. 

In Forsyth County, 4-H is supported by The University of Georgia, Forsyth County Board of Commissioners, Forsyth County Board of Education, and United Way of Forsyth County.  For more information on the 4-H Program or to register for a judging team, please call the Forsyth County Extension Office at 770-887-2418 or send an email to forsyth.extension@uga.edu.